Justia Legal Ethics Opinion Summaries

Articles Posted in US Court of Appeals for the Third Circuit
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Wolfington brought a claim under the Truth in Lending Act, 15 U.S.C. 1601, stemming from reconstructive knee surgery he received from Reconstructive Orthopaedic Associates (the Rothman Institute). Wolfington alleged that Rothman failed to provide disclosures required by the Act when it permitted him to pay his deductible in monthly installments following surgery. The district court entered judgment, rejecting Wolfington’s claim because it determined he had failed to allege that credit had been extended to him in a “written agreement,” as required by the Act’s implementing regulation, Regulation Z. The court also sua sponte imposed sanctions on Wolfington’s counsel. The Third Circuit affirmed in part, agreeing that Wolfington failed to adequately allege the existence of a written agreement, but concluded that counsel’s investigation and conduct were not unreasonable. In imposing sanctions, the district court placed emphasis on the statement by Rothman’s counsel, not Wolfington’s. The statement by Wolfington’s counsel did not amount to an “unequivocal” admission that there was no written agreement. View "Wolfington v. Reconstructive Orthopaedic Associates II, PC" on Justia Law

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Pulitzer Prize-winning journalist Golden was researching Golden’s then-forthcoming book, Spy Schools: How the CIA, FBI, and Foreign Intelligence Secretly Exploit America’s Universities. Golden requested documents from public universities, including three requests to the New Jersey Institute of Technology (NJIT) under New Jersey’s Open Public Records Act, N.J. Stat. 47:1A-1–47:1A-13 (OPRA). Many of the NJIT documents originated with the FBI and were subject to prohibitions on public dissemination. The FBI directed NJIT to withhold most of the records. NJIT obliged, claiming exemption from disclosure. After this suit was filed, NJIT and the FBI reexamined the previously withheld records and produced thousands of pages of documents, formerly deemed exempt. Golden then sought prevailing plaintiff attorneys’ fees under OPRA. The district court denied the fee motion. The Third Circuit reversed. Under the catalyst theory, adopted by the Supreme Court of New Jersey, plaintiffs are entitled to attorneys’ fees if there exists “a factual causal nexus between [the] litigation and the relief ultimately achieved” and if “the relief ultimately secured by plaintiffs had a basis in law.” Before Golden filed suit, NJIT had asserted OPRA exemptions to justify withholding most of the requested records. Post-lawsuit, NJIT abandoned its reliance on those exemptions and produced most of the records. Golden’s lawsuit was the catalyst for the production of documents and satisfied the test. That NJIT withheld records at the behest of the FBI does not abdicate its role as the records custodian. View "Golden v. New Jersey Institute of Technology" on Justia Law

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Brooks, Debtor's CEO, was charged with financial crimes. In class action and derivative lawsuits, Debtor proposed a global settlement that indemnified Brooks for liability under the Sarbanes Oxley Act (SOX), 15 U.S.C. 7243. Cohen, Debtor’s former General Counsel and a shareholder, claimed that the indemnification was unlawful. The district court approved the settlement, Cohen, represented by CLM, appealed. The Second Circuit vacated, noting that the EDNY would determine CLM’s attorneys’ fees award. Debtor initiated Chapter 11 bankruptcy proceedings. The Bankruptcy Court confirmed Debtor’s liquidation plan, with a trustee to pursue Debtor’s interest in recouping its losses from the ongoing actions. Brooks died in prison. Because his appeal had not concluded, some of his convictions and restitution obligations were abated. Stakeholders negotiated a second global settlement agreement, under which $142 million of Brooks’ restrained assets were to be distributed to his victims; $70 million has been remitted to Debtor. The Bankruptcy Court awarded CLM fees for the SOX 304 claim; the amount would be determined if Debtor received any funds on account of the claim. CLM’s Fee Appeal remains pending at the district court. CLM requested a $25 million reserve for payment of its fees. The Bankruptcy Court ordered Debtor to set aside $5 million. CLM’s Fee Reserve Appeal remains pending. CLM then moved, unsuccessfully, for a stay of Second Settlement Agreement distributions. In its Stay Denial Appeal, CLM’s motion requesting a stay of distributions was denied. The Third Circuit affirmed. The $5 million reserve is sufficient. A $5 million attorneys’ fees award for 1,502.2 hours of legal work totaling $549,472.61 of documented fees would yield an hourly rate of $3,328.45 and a lodestar multiplier of over nine. In common fund cases where attorneys’ fees are calculated using the lodestar method, multiples from one to four are the norm. View "SS Body Armor I, Inc. v. Carter Ledyard & Milburn, LLP" on Justia Law

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In 2010, Pennsylvania inmate Houser sued prison officials (42 U.S.C.1983), claiming deliberate indifference to his medical needs. Houser unsuccessfully requested appointed counsel. Discovery proceeded. The defendants moved for summary judgment in 2013. Houser filed opposition papers pro se but again moved to appoint counsel. The court denied the defendants’ motions, granted Houser’s motion, and conducted a search to secure pro bono counsel. After two attorneys declined the case, Reed Smith assumed Houser’s representation and devoted over 1,000 hours to the case before moving to withdraw based on fundamental disagreements with Houser on strategy, a breakdown in communication, and an irremediably broken attorney-client relationship. The court told Houser that it could not dictate strategy, and stated: “We’re not going to ask anyone else... do you want to ... represent yourself?” Houser never gave a straightforward answer. The court granted Reed Smith’s motion. Houser unsuccessfully requested that the court put him back on the “appointment of counsel” list and stay the case. Noting that the case was five years old, the court pushed the trial to December 2015. In October 2015, Houser unsuccessfully moved to appoint counsel. A jury returned a verdict for the defendants. Houser unsuccessfully moved for a new trial based on the denial of his motion to appoint counsel. Houser moved to reconsider, arguing his claims had merit and involved “medical issues that were complex including requiring an expert” and the “conflicting testimony of multiple witness[es].” The Third Circuit affirmed the denial of the motion; denying Houser new counsel was not an abuse of discretion. View "Houser v. Folino" on Justia Law

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In 2017, the League of Women Voters and Pennsylvania Democratic voters filed a state court lawsuit challenging Pennsylvania’s 2011 congressional districting map. They alleged that Republican lawmakers drew the map to entrench Republican power in Pennsylvania’s congressional delegation and disadvantage Democratic voters and that the Republican redistricting plan violated the Pennsylvania Constitution by burdening and disfavoring Democratic voters’ rights to free expression and association and by intentionally discriminating against Democratic voters. Five months later, State Senate President Pro Tempore Scarnati, a Republican lawmaker who sponsored the 2011 redistricting plan, removed the matter to federal court, contending federal jurisdiction existed because of a newly scheduled congressional election. The federal district court remanded the matter to state court, where the suit has since concluded with a ruling in favor of the plaintiffs. Citing 28 U.S.C. 1447(c), the federal court directed Senator Scarnati personally to pay $29,360 to plaintiffs for costs and fees incurred in the removal and remand proceedings. The Third Circuit ruled in favor of Scarnati, citing the Supreme Court’s directive that courts carefully adhere to the distinction between personal and official capacity suits, The court upheld a finding that the removal lacked an objectively reasonable basis. View "League of Women Voters of Pennsylvania v. Pennsylvania" on Justia Law

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Adams, a resident and member of the State Bar of Delaware, wanted to be considered for a state judicial position. Following the announcement of several judicial vacancies, Adams considered applying but ultimately chose not to because the announcement required that the candidate be a Republican. Because Adams was neither a Republican nor a Democrat, he concluded that any application he submitted would be futile. Adams challenged the Delaware Constitution's provision that effectively limits service on state courts to members of the Democratic and Republican parties, citing Supreme Court precedent: A provision that limits a judicial candidate’s freedom to associate (or not to associate) with the political party of his choice is unconstitutional. The governor responded that because judges are policymakers, there are no constitutional restraints on his hiring decisions. The Third Circuit ruled in favor of Adams, concluding that judges are not policymakers because whatever decisions judges make in any given case relates to the case under review and not to partisan political interests. The portions of Delaware’s constitution that limit Adams’s ability to apply for a judicial position while associating with the political party of his choice violate his First Amendment rights. View "Adams v. Governor of Delaware" on Justia Law

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In March 2015, the Boards of Penn State Hershey Medical Center and PinnacleHealth formally approved a plan to merge. They had announced the proposal a year earlier; the Commonwealth of Pennsylvania and the Federal Trade Commission (FTC) were already investigating the impact of the proposed merger. This joint probe resulted in the FTC filing an administrative complaint alleging that the merger violated Section 7 of the Clayton Act, 15 U.S.C. 18. The FTC scheduled an administrative hearing for May 2016. The Commonwealth and the FTC jointly sued Hershey and Pinnacle under Section 16 of the Clayton Act, and Section 13(b) of the FTC Act, 15 U.S.C. 53(b) seeking a preliminary injunction. In September 2016, the Third CIrcuit reversed the district court and directed it to preliminarily enjoin the merger “pending the outcome of the FTC’s administrative adjudication.” Hershey and Pinnacle terminated their Agreement. The Commonwealth then moved for attorneys’ fees and costs, asserting that it “substantially prevailed” under Section 16 of the Clayton Act. The district court denied the motion, finding the Commonwealth had not “substantially prevailed” under Section 16. The Third Circuit affirmed, reasoning that it had ordered the injunction based on Section 13(b) of the FTC Act, not Section 16 of the Clayton Act. View "Federal Trade Commission v. Penn State Hershey Medical Center" on Justia Law

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Carlson was co-lead counsel representing the plaintiffs in the CBNV litigation. He began working on the case while an associate with the SSEM firm and continued working on it after he left the firm. He entered into agreements with SSEM regarding how fees recovered in CBNV and other cases would be allocated. After the final order approving the CBNV class settlement and fee award, SSEM filed a state court breach of contract action against Carlson, alleging that he owed the firm part of his CBNV fees. Carlson moved the federal district court, which had handled the CNBV litigation, to stay the state case and confirm his fee award. That court exercised ancillary jurisdiction to stay the state case and granted Carlson’s motion, concluding that SSEM was not entitled to any portion of the Carlson's fee because a condition precedent had not occurred. The Third Circuit reversed. The district court erred in exercising ancillary jurisdiction over the state contract dispute because it did not retain jurisdiction over disputes arising from the allocation of fees, the state law contract claim is factually distinct from the federal CBNV claims, exercising ancillary jurisdiction was not necessary to resolve matters properly before it, and the court had no control over the funds SSEM seeks. View "In Re: Community Bank of Northern Virginia Mortgage Lending Practices Litigation" on Justia Law

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Pollick represented students in civil rights claims against a school district and a teacher. After the first trial, the jury returned a verdict for Pollick’s clients. The Third Circuit affirmed an order requiring a new trial based upon Pollick’s misconduct. The second trial, only against the school district, resulted in a complete defense verdict. Before a third trial, the teacher tendered a Rule 68 offer of judgment for $25,000, which Pollick’s clients accepted; it allowed for “reasonable attorneys’ fees and costs as to the claims against [the teacher] only.” Pollick submitted a petition requesting $733,002 in fees and costs incurred while representing her clients against both the district and the teacher, including fees and costs for the second trial in which Pollick’s clients were not the prevailing party. The court ordered Pollick to show cause why she should not be sanctioned for seeking “fees and costs for portions of the litigation that were necessitated by her own vexatious conduct, as against defendants that she ultimately did not prevail, for certain expenses previously held unrecoverable ... and relative to the total settlement of $25,000[.]” Pollick proffered the “utterly ridiculous argument” that it was the job of opposing counsel and the court to ferret out entries that were invalid. Noting that the fee petition was single-spaced, in 6- or 8-point font that consumed 44 pages and included hundreds of inappropriate, unethical entries, the court denied Pollick’s petition in its entirety, issued concurrent $25,000 sanctions (FRCP 11; 28 U.S.C. 1927), and referred Pollick to the Pennsylvania Supreme Court’s Disciplinary Board. The Third Circuit affirmed, concluding that the “drastic” measures were justified. View "Young v. Smith" on Justia Law

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Dissatisfied with NYCM’s handling of his insurance claim related to a serious car accident, Clemens filed suit, asserting a contractual underinsured motorist (UIM) claim and a claim under the Bad Faith Statute, 42 Pa. Cons. Stat. 8371. After NYCM removed the case to federal court, the parties settled the UIM claim for $25,000. The bad faith claim proceeded to trial. A jury awarded Clemens $100,000 in punitive damages. As the prevailing party under the Bad Faith Statute, Clemens then sought $946,526.43 in attorneys’ fees and costs. The district court reviewed every time entry submitted, performed a traditional lodestar analysis, and concluded that 87 percent of the hours billed had to be disallowed as vague, duplicative, unnecessary, or inadequately supported by documentary evidence. In light of that substantial reduction, the court deemed Clemens’s request “outrageously excessive” and exercised its discretion to award no fee. Represented by new counsel, Clemens appealed. The Third Circuit affirmed, formally endorsing a view adopted by several other circuits: where a fee-shifting statute provides a court discretion to award attorney’s fees, such discretion includes the ability to deny a fee request altogether when, under the circumstances, the amount requested is “outrageously excessive.” View "Clemens v. New York Central Mutual Fire Insurance Co." on Justia Law